Read the audit
To view the Amsterdam audit, click here.
AMSTERDAM The city of Amsterdam assumed more than $16 million in debt by March 2013 to pay for expenses typically funded by normal budget operations, according to a state audit.
Borrowing to pay daily expenses is one of several issues raised in the audit released by the state Comptroller’s Office on Friday.
Despite the availability of borrowed money, city officials whittled away at $3.5 million in reserves starting in 2007, leaving slightly more than $620,000 by the end of the 2011 fiscal year.
To view the Amsterdam audit, click here.
Here is a story we published in late October detailing some of the Amsterdam problems.
Auditors outlined a host of accounting errors depicting a confused process by which the city balanced its books — a process officials said Friday will change under a corrective action plan.
Budgeting was so out of tune that the city in 2012 reported it would collect $13.4 million consisting of city taxes and fees and county and school district taxes. State auditors summed up the “receivables” using actual tax bills and found the amount actually due was $9 million, a difference of roughly $4.4 million.
The city’s accounts a year later called for $25.6 million in receivables, but accounts that were due actually totaled only $14.5 million, an $11.1 million difference, according to the audit.
Inaccurate and incomplete records left the city’s Common Council with “unreliable” balance sheets to work with during budget development, the audit said.
“These inaccuracies precluded the Council from properly assessing and monitoring the City’s financial condition,” the audit states.
Although the audit puts numbers to the challenges, the city still doesn’t know how much money is available, Fourth Ward Alderwoman Diane Hatzenbuhler said Friday.
“Right now, we don’t know where we’re at,” Hatzenbuhler said.
The city’s fiscal woes came to the forefront after former Controller Heather Reynicke left office during a change in computer accounting systems. A new controller, Ronald Wierzbicki, worked for a year to try to iron out the accounts, but he died in December 2012, leaving the office vacant until Wednesday.
In the interim, the city hired Deputy Controller David Mitchell, who has made progress, Hatzenbuhler said.
Taking office this week was Matthew Agresta, the city’s new controller, who was elected in November, putting the office at full staff.
Two separate audits are underway, Hatzenbuhler said: one for all the city’s books and another one for its capital accounts.
“We have qualified people in place, and we are working together to get everything straightened out,” Hatzenbuhler said.
Once those audits are complete, she said, the city should know precisely how much money is available.
The new accounting software will provide the Common Council with a current status of funds, she said.
“Those of us on the council are going to be conservative in our spending to make sure that we never end up in this position again. Let’s face it, when you’re going out and borrowing … that’s not good news, that means you’ve got a bad cash flow,” Hatzenbuhler said. “We have to get on top of this, and I expect that when the proposed new budget comes out in March or April that we will have a much better handle on things.”
The city’s weak grasp on its finances has already caused damage. Failure to provide annual financial data to the state led the federal government to freeze about $2 million in grant funding. The Amsterdam Urban Renewal Agency was paying a contractor in October with revolving loan funds that are supposed to help businesses create jobs, and the lack of that grant funding delayed a $600,000 storm drain project.
The lack of sufficient data from the city led Moody’s Investors Service to pull its credit rating altogether. Faced with “insufficient or otherwise inadequate information,” Moody’s announced it couldn’t provide investors “an informed assessment of current credit quality.”
Mayor Ann Thane said a comprehensive response to the Comptroller’s Office concerning the audit is being refined. It contains a variety of fixes, including policies and procedures requiring training for employees and more oversight of activities in the city’s Finance Department, she said.
Thane advocated for a change in the city’s charter to hire, instead of elect, a controller, with the goal of hiring an accountant skilled in municipal finance. Residents voted the measure down, however.
“Certainly one of the biggest things that was identified was a lack of expertise in that department. We brought in a new deputy controller position to help manage that, so that we have institutional memory and strength outside of the electoral cycle,” Thane said.